Moving off Track – Akhtar v Boland [2014] EWCA Civ 872 considered

Barrister

The appropriate track for a claim is often
obvious, and is rarely a point of dispute. That said, the track the claim is
allocated to will have a huge effect on the way the case is run and perhaps more
importantly, what the cost of running that case will be. In that context the
case of Akhtar v Boland [2014] EWCA
Civ 872 deserves more coverage than it has received thus far.

The claim arose from a road traffic accident
in October 2011. Mr Akhtar (or at least his insurers) claimed £6,392.80 on
account of credit hire charges. No claim for personal injuries was made. The defendant
admitted (subject to liability) £3,866.80 worth of that claim. When it came to allocation,
the defendant averred that since the ‘amount in dispute’ was under £5,000 (the
small claims limit at the time), the matter should be allocated to the small
claims track. The District Judge agreed. The claimant appealed.

The Court of Appeal dismissed that appeal.
Their Lordships took the unanimous view that if a defendant wished to admit
parts of the claim, and that as a result of those admissions ‘the amount in
dispute’ was under the £5,000 threshold, then the small claims track was indeed
appropriate.Article continues below...

Significance
of the judgment
Including additional liabilities and
disbursements, the claimant’s estimated costs came to around £15,000 (should
the matter proceed to trial). However, because the claim was allocated to the
small claims track, they were now only entitled to receive costs in accordance
with CPR 27.14 (i.e. disbursements plus £80). Therefore, by admitting around
£3,900 worth of the claim (still subject to liability), the defendant insurer
saved themselves from having to pay up to £15,000 in costs. Even were there no
success fee in place then that is a costs benefit analysis that surely any defendant
would look favourably on!Using
Akhtar

Akhtar therefore offers defendants the opportunity to admit parts of the
claim (sometimes small) in order to avoid paying the claimants costs (sometimes
large). That will often be an attractive option. In simple terms, if the claim
amounts to £10,500, the defendant can admit that an amount of £600 (subject to
liability), and save themselves to have pay nearly any costs at all. For many,
that will be a straightforward choice – the costs are clearly outweighed by the
benefits.

The more interesting scenario (which has not
been tested) will be where there is a claim for personal injuries as well. The
exercise becomes more difficult since the claim for general damages will be
(usually) unspecified - E.g., ‘the claimant expects to recover damages for more
than £1,000 in respect of personal injury and loss, but not more than £5,000’
(for example). In those circumstances can
a defendant still admit part of the claim for general damages in order to get
the claim onto the small claims track and avoid costs, despite the unspecified nature
of the pleading?

One possibility would to admit £4,000 worth
of the general damages claim (subject to liability), leaving the remaining
amount in dispute as £1,000, thus taking the matter into the small claims
track. A claimant might make an application to amend, but such an application
might not be successful. In many cases to admit such a large amount would be to
overvalue the claim for damages, but it would probably still result in a saving
when looking at the total outlay.

Pressure could also be applied by making a
Part 36 offer for a sum of £4,000 on account of general damages after the
service of the claim form, but early enough so that the 21-day period expires
before directions questionnaires are due. If the claimant were unlikely to
receive £4,000 on account of general damages then the offer should be accepted,
and the remainder of the claim would continue in the small claims track.
Conversely if it is not accepted, then the defendant can either: a) withdraw
the offer or b) at least receive some costs when that offer is not beaten at
trialSummary

The above are merely two options that are
now available to defendants following the decision in Akhtar. In fact, they are two options that to the author’s
knowledge are yet to be tested. There may well be other ways that the judgment
could be used. Each defendant should do a costs/benefit analysis of admitting a
part of the claim vs potentially being liable for the claimant solicitor’s
costs.

In trying to keep matters on the fast track claimants
will either need to be more vague when pleading general damages (within the
rules) or try to find an element of the claim that would justify the matter not
being on the small claims track (e.g. points of law/evidence in dispute).

Either way, if defendants begin to use Akhtar as the tactical weapon that it
potentially could be, then allocation might not become as straightforward as it
perhaps once was.